Chapter In Case of South Asian Economies The average

Chapter SixFindings and Policy Implication 6.1 Findings6.1.

1In Case of South Asian EconomiesTheaverage GDP growth and productivity growth of South Asian economies are 7.49percent and 9 percent respectively. Mobile cellar subscription is increasingday by day.

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

The proximity of telephone subscription is very low because of intensiveuse of mobile. For example, in Bangladesh, nowadays, there is greater than onemobile phone users in each house. And there is hardly to find one telephoneset. The intensity of internet using is also increasing day by day in thisregion. In Bangladesh, the numbers of mobile phone companies provide attractiveservices to customers. Recently Grameen Phone has provided 1 GB internet forthe price of 9 taka. But to use the internet, there is less availability offixed broadband subscription in these economies. Inthese economies, the supply of money is half of the GDP.

If the money supplyincreases in the economy, there creates more scope to access to finance easilyfor business investors. Since the amount of broad money is higher in SouthAsia, there is availability of liquid money for investment. Besides domesticcredit provided by financial sector is higher than the domestic credit providedby banks in this region. And the private sectors are taken much loan thancentral government.

Throughregression coefficient it is clear that productivity growth fells positiveimpact on GDP growth but ICT growth and financial development fells negativeimpact on GDP growth. Labor productivity is the amount of goods and servicesproduced per hour by labor and GDP is the amount of goods and services of theeconomy. That is why the productivity growth indicates that there is increasein GDP growth. Theimpact of GDP growth and ICT growth fells positive impact on productivitygrowth but financial sector fells negative impact on productivity growth.Higher productivity growth generates high GDP growth by producing higherrevenue to enable firm producing greater amount of output with the same levelof input.  And now the emergence of newtechnological system produces the greater amount of output per unit of hour.Since productive growth is directly related to GDP growth, it fells more impacton it that ICT sector.Inthese economies, labor productivity growth and GDP growth also fell positive tostimulate the ICT growth.

When the productivity growth increases, the firmsfeels the need of adoption of new ICT tools for generating more profit. Andwhen economic growth rises, the people of that economy feels the greater demandof using technology.Besides,GDP growth fells positive impact on financial development. Note that GDP growthis an important measure of economic growth. Since in these economies economicgrowth rises, they fell the need of establishment more financial institutions,attaching more people with financial services and thus create financialdevelopment.

 6.1.2In case of South East, Central Asia and Other EconomiesInthese economies, the GDP growth is faster than the productivity growth. Butthey both are upward trendy.

Though in year of global financial crisis, the GDPgrowth and productivity growth negatively impacted, these economies overcome itproperly.Beforethe global financial crisis, financial development grows much faster in theseeconomies than ICT growth. But after the global financial crisis, ICT growthsurpasses the growth of financial development. Since because of financialcrisis, there was devastating effect on financial sector in these economies.But ICT adoption has grown in consistent manner.Inthese economies, labor productivity fells positive impact on GDP growth.Indonesia is one of the most affluent countries in South East economy.

Theywere concerned with their low GDP growth. Later they found the reason why GDPgrowth performance is low. The reason is poor productive performance. Then theytook policy associated with productivity to stimulate GDP growth.Thegrowth of GDP and ICT sector fells positive impact on productivity growth. Butthe magnitude of impact of GDP growth is more because it has direct associationwith labor productivity. In Korea, mobile cellular subscription and intensiveuse of ICT tools has increased the output per worker (Kumar, 2015).

Thegrowth of labor productivity and financial development fells positive impact onICT growth. And here productivity has got priority to stimulate ICT growth thanfinancial development. Kumar (2016) has found bi-directional relationshipbetween labor productivity and economic growth. This implies that if use of ICTtools increases productivity, the firm feels the need of more adoption of ICTtools for the growing productivity.

And if financial system is developed, thefinancial institution feels the need of sophisticated ICT tools. Finally thegrowth of ICT and GDP enhances the growth of financial development. 6.1.3In Case of African EconomiesInAfrican economies, the growth of GDP is more rapid than that of productivitygrowth.

And financial growth is higher than ICT growth in most of the timeperiods. The global financial crisis is not impacted the financial systembecause their weak financial system are not linked with global economy.Laborproductivity growth, ICT growth and financial development have positive impacton GDP growth.

Since labor productivity is an essential factor to increase GDPgrowth. It plays an important role. Besides the African economies developstheir financial system by reducing government interventions and privatizing thefinancial institutions which ensure the GDP growth of the economy (Gries etal., 2009).GDPgrowth ensures the productivity growth. Besides the ICT growth and financialdevelopment also impacted positively on the level of productivity growth.

Theproductivity growth and financial development growth fells positive impact onICT growth. Since the developed financial system feels the necessity ofadvanced technology. And to make the labor more productive, the firm needs thefeel of ICT tools. And finally the growth of labor productivity and ICT growthfells positive impact on financial development growth of African economies. 6.1.4In Case of Latin American and Other EconomiesGlobalfinancial crisis had also impacted the financial sector of Latin Americaneconomies.

Before financial crisis the growth of financial sector is more thanthe growth of ICT sector. But after that the growth rate reduces than ICTgrowth.Thegrowth of labor productivity increases the growth of GDP. Hofman (2016) saidthat the divergence of GDP growth between U.S.A and Lain American economies isthe gap of productivity growth. Conversely the GDP growth also contributes toincrease productivity growth.

Toincrease ICT growth, the financial development plays an important role. And toincrease financial development, ICT growth does not play role. So there existsunidirectional relationship in between them. 6.

2 Policy Implication6.2.1In Case of South Asian EconomiesItis very difficult to take the policy for economists to stimulate thedevelopment of one economy. In this study, for adopting policies, two tools areused. First one is regression coefficient which shows the current effect of onevariable on another. And second one is impulse response function which forecastthe future trend based on the continuation of current trend.

According tocurrent trend, ICT based policy is appropriate for the development. Since1 percentincrease in ICT diffusion enhances labor productivity by 0.04 percent, again 1percent increase in labor productivity enhances GDP growth by 0.8 percent and 1percent increase in GDP growth enhances CIF by 1.31 percent.

Thus ICT growthcreate chain reaction to the path of development.Butaccording to impulse response function, financial development and ICT may fellnegative impact on GDP growth and productivity growth when the financialdevelopment and the adoption of ICT tools will reach to threshold level. Thenthey may not able to add value in the economy. In future, labor productivity orGDP growth based policy may be appropriate for the development. Between thesetwo, GDP growth based policy should get most priority since it may fell impactmost on ICT and financial sectors.

The economy can also take financial policyalong with it because it enhances the growth of ICT sector more than the othervariables. 6.2.2In Case of South East, Central Asia and Other Economies Inthese economies, the current trend suggests that economic growth based policyand labor productivity based policy are appropriate for the development. In thefirst policy, GDP growth increases productivity growth, again productivitygrowth increases ICT diffusion and that increases the financial development.And in the second policy, labor productivity increases GDP growth, thatincreases financial growth and that again increases ICT growth. According toeconomic forecasting, financial development policy may impact ICT growth moreand vice versa. Besides to increase GDP growth, financial policy and ICT growthpolicy may impact almost same and there is less impact of productivity.

Andfinally to increase productivity growth, the ICT growth based policy, financialpolicy and GDP growth based policy may impact at an increasing trend and steadystate level respectively. 6.2.3In Case of African EconomiesInthese economies, the current trend suggests that economic growth based policyor financial development based policy or ICT based policy are appropriate forthe development. According to economic forecasting, financial based policy maybe more effective than economic growth based policy and ICT based policy. Dueto the shock of financial development, the responsiveness of GDP growth, productivitygrowth and ICT growth may be good.

 6.2.4In Case of Latin America and Other EconomiesInthese economies, the current trend suggests that labor productivity or economicgrowth based policy and financial development based policy are needed. Accordingto economic forecasting, labor productivity or economic growth based policy mayhave no problem. But this trend suggests that ICT growth based policy may bemore effective to enhance financial development. Since financial policy mayhave negative impact on ICT growth.             ChapterSevenConcludingRemarks 7.

1ConclusionThestudy investigated the long run relationship amid ICT diffusion, financialdevelopment, labor productivity and economic growth for 56 developing countriesfor the time period from 1995 to 2015. The study has found different policiesfitted for different regions.  In SouthAsia, the study has found that there is bi-directional in between CII and CIF;Ln productivity and CII; and Ln GDP and Ln productivity. And there existsuni-directional relationship in between Ln GDP and CIF; Ln productivity andCIF; and Ln GDP and CII.

Ultimately there is found the policy for this regionthat ICT diffusion can drive the development of this economy by stimulating GDPgrowth, productivity growth and financial development. In South East, CentralAsia and other economies, there is found bi-directional relationship in betweenLn GDP and CIF; Ln GDP and CII; Ln productivity and CII; CII and CIF; and LnGDP and Ln productivity. And there is uni-directional relationship in betweenLn productivity and CIF. And the fitted policy for this region is economicgrowth based policy or labor productivity based policy. In African economies,there is found bi-directional relationship in between CII and CIF; LP and CIF;LG and CII; Ln productivity and CII and LP and LG. And there is found uni-directionalrelationship in between Ln GDP and CIF.

To stimulate development, the countriesof this region can concentrate on economic growth or financial growth or laborproductivity growth. In Latin America and other economies, there is founduni-directional relationship in between CII and CIF; Ln GDP and CIF; and Ln GDPand CII. And there is found bi-directional relationship in between Lnproductivity and CIF; and Ln productivity and Ln GDP. And the appropriatepolicies for development are financial based policy or economic growth orproductivity growth based policy. The two policies have to take simultaneously. 7.2 Further ResearchOption In this study, there has been usedsome proxy variables regarding ICT diffusion and financial development to studydifferent literatures.

But there are so many factors which are associated withthose variables which may give the different results and different policies.And those policies may be more appropriate than the given policies in thisstudy. So there has scope to further research on this issue.